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11 Must Reads for Real Estate Investors (Nov. 13, 2023)

CBRE President and CEO Robert Sulentic said office real estate values could fall another 10% before reaching their nadir. The Wall Street Journal looked at the rise in distress among mezzanine loans. These are among the must reads from the real estate investment world to kick off the new week.

  1. Commercial real estate valuations are so hard-hit that CBRE warns they could fall ‘another 10%,’ after saying earlier they ‘may come down 15%, 20%’ “The rise in remote work since the pandemic has had far-reaching implications for the real estate industry, including property owners that Sulentic’s company counts as clients.” (Forbes)
  2. The Clearest Sign Yet That Commercial Real Estate Is in Trouble “The Journal analysis found notices for 62 mezzanine loans and other high-risk loans this year through October. That is more than double the number for all of last year, and likely the highest total ever for a single year, as higher interest rates and rising vacancies punish the property sector. The increase in mezzanine-loan foreclosure announcements—while not large in absolute numbers—matters because it offers a more immediate measure of commercial real-estate distress than mortgage foreclosure rates.” (The Wall Street Journal)
  3. Mel Sembler, Developer and G.O.P. Fund-Raiser, Is Dead at 93 “Mr. Sembler, who developed more than 350 shopping centers and other retail projects in the Southeast, was a sought-after fund-raiser for Republicans, capable of shaking the money tree for $11 million at a single dinner.” (The New York Times)
  4. A Seismic Generational Shift Is Afoot Among New York's Real Estate Stalwarts “Major shake-ups in the C-suites of some of the biggest real estate firms in New York are reshaping the leadership landscape across the city as the industry grapples with a prolonged downturn and how best to prepare itself for the next chapter.” (Bisnow)
  5. Report: With High Rates and No Supply, Retail’s the New Darling of CRE Finance “A new report from JLL Capital Markets found that a supply crunch in retail has pushed rents up and made retail properties a popular lynchpin of capital markets securitizations, investments and mergers now that office has fallen out of favor in the post-COVID climate.” (Commercial Observer)
  6. New GSA Real Estate Head Elliot Doomes On Managing The Government's Portfolio “Elliot Doomes is no stranger to managing the federal real estate footprint. He has spent nearly his entire career behind the scenes, making crucial decisions about where and how the government uses space.” (Bisnow)
  7. Amazon to Expand Grocery Delivery, Resume Supermarket Openings “The expansion, announced Thursday, is part of a grocery reboot reported by Bloomberg in August. Shoppers will be eligible for the offering anywhere the company operates its Amazon Fresh service. Non-Prime members will be charged $4.95 to $13.95 for delivery, while members now pay $6.95 to $9.95, with free deliveries over $100.” (Bloomberg)
  8. Former Freddie Mac CEO distances himself from Meridian Capital “Sources close to both companies said that, practically speaking, Brickman never really did anything at Meridian as an executive chairman. The title was given to him as he worked to launch Newpoint, but he never performed any of the advisory or oversight roles at Herzka’s brokerage that are typically done by executive chairs.” (The Real Deal)
  9. Private Debt Was Supposed to Collapse When Rates Rose. Instead It Is Everywhere. “Private-equity firms such as KKR, Apollo and Blackstone are channeling an increasing share of their assets into these markets. This year, asset-management behemoths such as BlackRock, Fidelity and PGIM, owned by Prudential, have also invested heavily in the sector.” (The Wall Street Journal)
  10. Real estate industry trembles over commissions on home sales “In a federal civil case, a Kansas City jury last month found the National Association of Realtors (NAR) and major brokerages conspired to keep commissions artificially high. The result has left the real estate industry holding its collective breath, as experts say it is on the cusp of a radical reorganization that could affect everything about the business.” (Washington Post)
  11. Are Suburban Office-to-Industrial Conversions Feasible? “Once, the orientation of industrial real estate centered on retail storage. But e-commerce has amplified demand for direct-to-consumer, rather than direct-to-store delivery. That places a premium on last-mile distribution. Conversion-targeted office parks are within that last mile.” (Commercial Property Executive)
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